Closed end piles? It's a LOOOOOOOOONG story! The engineer is very worried about displacement and vibrations, among a few other concerns. He's very nervous and seems to be trying to dump everything on the contractor in the form of a VE proposal.
FHWA has some guidelines for the plug. Basically, they're saying that in sands plugging generally begins at a pile penetration of 20 diameters but can be as high as 35 diameters. For soft to stiff clays, it's about 10 to 20 diameters.
FHWA's Driven pile design program assumes that during driving of the open end pile in granular soil there is no plugging. However, for the static (restrike) or long term (ultimate) conditions, 30 diameters of penetration is required for assuming full tip bearing.
The engineer thinks the pile has to be driven 20 diameters into a very, very, hard (N >> 50 to 100/1"

granular layer in order to develop a plug. He is ignoring the sand layer(s) above the bearing layer. WEAP analyses using conservative soil values for the bearing layer show the pile can't be driven more than a foot or two into the layer without damaging the pile with a larger hammer. It'll never go 20 feet.
Most references I read about open end pipe piles (and H-Piles) say that the plug forms - period, no penetration requirements. Other references talk about concreted open end piles where the plug keeps being removed as the pile is driven. This is not what the involved parties are leaning toward.
The more I read, the less clear the issue becomes.